Bitcoin’s Four Halvings – a Historical Snapshot

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  • Bitcoin’s fourth halving occurred this week, reducing the block reward from 6.25 to 3.125
  • Three months ago, Bitcoin ETFs were approved in the US, marking a significant departure from previous halvings
  • We examine the context of the three previous halvings and the state of the Bitcoin ecosystem with each one

This week saw Bitcoin’s fourth halving, where the block reward dropped from 6.25 to 3.125. This halving has come at a time when mass institutional adoption is on the doorstep thanks to the awarding of Bitcoin ETFs in the US three months prior, which is the biggest difference (mins COVID) in Bitcoin compared to the prior halvings. In this piece, we look at the three halvings that have come before and what the Bitcoin world was going through at the time.

Halving One, 2012 (50-25 BTC)

We dedicated an entire article to the first halving, which took place on November 28, 2012, a time when hardly anybody had heard of Bitcoin. At the time, Bitcoin was enduring its first bear market, having hit $30 in November 2011. This was followed by an 82% drop in price, ending with Bitcoin at just $2 by June 2012.

By the time of the first Bitcoin halving five months later, the price had recovered significantly and was sitting at $10. Despite it being the first halving, there was little sign of trepidation on Bitcointalk, the primary Bitcoin forum at the time. Halving parties, both physical and virtual, were being planned, with almost everyone on the messageboard fully aware of the bullishness that the halving would engender.

The graphics card that mined the first post-halving block was auctioned off in 2013 for $850.

Halving Two, 2016 (25-12.5 BTC)

By the time of Bitcoin’s second halving in 2016, lots had happened, from Silk Road being shuttered to MtGox collapsing. The latter caused a crisis of confidence in Bitcoin and a plethora of negative headlines, helping the price crater from a December 2013 high of $1,100 to $160 by January 2015.

The whole world thought Bitcoin was dead and buried, but it proved them wrong; by the time of the second halving on July 9, it was already back at $670 on its way to a rally that would end at $19,800 in December 2017.

Halving Three, 2020 (12.5-6.25 BTC)

The third Bitcoin halving came on May 11, 2020, right at the COVID was exerting a firm grip on the world. The prior bull market had seen Bitcoin truly enter the mainstream, and, as a result, governments and tax authorities were starting to look very seriously at it indeed, threatening to bring an end to the consequence-free moneymaking that had previously been taking place.

The 2020 halving came two months after Bitcoin’s catastrophic crash from $10,000 to $3,750, showing incredible resilience to bounce back to its pre-crash level by the time of the halving. Bitcoin did almost nothing for the two months after the halving before embarking on a rally that saw it top out at $69,000 in November 2021.